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Public, private companies report rise in audit fees in FY 2012

Fees for external audits of financial statements paid by U.S. public
and private companies rose in fiscal year 2012 over the previous year,
according to a new survey report.

Audit fees paid by 87 public companies averaged $4.5 million in FY
2012, according to a Financial Executives International (FEI) report.
That represented a 4% increase over the audit fees those same
companies paid in the previous fiscal year.

Private companies paid an average of $147,800 in total audit fees in
FY 2012, an increase of 3% over their FY 2011 audit fees. Executives
from 118 private companies participated in the survey.

It was the third straight year of fee increases reported by public
companies in the annual survey, which previously showed increases of
5% in FY 2011 and 2% in FY 2010 after a fee decrease was reported in
FY 2009.

Public company respondents most commonly said audit fees increased
for their companies because of additional audit work required related
to corporate acquisitions, and the perception that PCAOB inspections
of audit firms have led to rising audit fees. Private company
executives cited corporate acquisitions and inflation as reasons for
the rise in their audit fees.

Centralized operations correlated with lower audit fees for both
public and private companies in the survey. Public companies with
centralized operations paid an average of $3.7 million for their
audits, compared with $4.6 million for their counterparts with
decentralized operations.

Private companies with centralized operations paid an average of
$103,500 for their audits, while fees for public companies with
decentralized operations averaged $354,600 in audit fees.

“We continue to believe that the audit of the financial statements
of a company with centralized operations is more efficient than that
of a company with decentralized operations, and this year’s survey
results demonstrate that this still holds true,” FEI President and CEO
Marie Hollein said in a news release.

The average number of audit hours required for public company audits
was 16,737. Private companies reported an average of 1,769 hours
required for their audits.

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